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> Because nuclear plants are expensive, and they take a long time to build, financing their construction can also be a significant fraction of their cost, typic
by xroche 4y ago
> Because nuclear plants are expensive, and they take a long time to build, financing their construction can also be a significant fraction of their cost, typically around 15-20% of the cost of the plant. For plants that have severe construction delays and/or have high financing costs (such as the Vogtle 3 and 4 plants in Georgia), this can be 50% of the cost or more.
This is why nuclear power plants should be state-sponsored projects. States typically have loans at 0% rate, or even negative interests.
- sfe22 4y agoZero percent or negative just means people involuntary pay by inflation. There is not free lunch (someone had to work to make it)
- danuker 4y agoNegative interest rates mean more than your units of currency going down in purchasing power. It also means them going down in number (a bank CHARGES you for the costs incurred holding your money).
- kube-system 4y agoNo, interest rates are quoted nominally -- i.e. they are independent of inflation. If you purchase a negative interest rate instrument and experience inflation, you will lose real value to both.
- trashtester 4y agoIt is a tax on deposits. You only have to pay if you have deposits. Basically, it means the saver has to pay to store value as currency. On the other hand, they also have to pay if they want to store other valueables, such as gold or the most ancient store of value of all, grain. I don't think a negative real interest rate is inherantly unfair, any more than it was unfair to have 10% of grain go to waste 3000 years ago when storing for a bad year. If you had 7 good years, and expect 7 bad years, the utility of the stored grain may be way higher in the bad years than the good years, even when accounting for the waste. The same goes for cash. The same can be true with cash. To demand that cash maintains its purchasing power, is the same as ancient farmers demanding to purchase grain from their neighbour (who did save) in a bad year as they themselves got paid for their grain during the good years. In periods of growth, we may start to think that positive time preference is natural. But the fact is that throughout most of human history, we would switch to negative time preference in good times, since we expected bad times to come back. During good times, humans would store grain, dry meat, fish and fruit, build housing, tools or boats, all of which were investments into goods that were likely to gradually perish over time. Even after people started to use coins, this was true. If you produced a surplus during one year, you could trade it for cold coin instead of storing it. But not only was there a risk that the coins would be stolen or otherwise vanish, it was also highly likely that at the time where you needed to spend that goal, prices would be higher.
- imtringued 4y agoOne has to consider that the storage capacity of the economy isn't infinite. Charging money for storing something is a very straightforward business model. When your economy is growing the storage capacity appears endless as no storage is actually needed, you can just produce the good in the future with your expanded production capacity. Once the economy stops growing for even a single year, then you will effectively hit the storage capacity of the economy and must pay to store additional goods that are intended to be consumed in the future.
- imtringued 4y agoIf there is a negative interest rate of 4% on cash, then the easiest way to avoid it would be to lend out your money at 0%. Since there is no growth dependence and excessive savings do not grow automatically anymore there is no need for inflation and the central bank can do price level targeting instead.
- pmyteh 4y agoYes, probably. This can bring its own problems, though. In Britain, for example, the Treasury is extremely reluctant to approve new public capital projects, even at negative real interest rates. Investment is effectively rationed by requiring a benefit/cost ratio of above 2 (at net present value, after making heavy optimism bias adjustments) before it will approve funding. New nuclear won't get close to that on any conventional appraisal, which is one reason why our current nuclear new build is happening on an eye-wateringly expensive private finance arrangement.
- ImHereToVote 4y agoThis is because of "not corruption"
- pmyteh 4y agoIt's mostly because the ability of the economy to produce positive economic (but not direct financial) returns on very cheap credit is basically infinite, and borrowing money to invest in all of these things would need a huge amount of extra tax revenue to pay off the loans, which is hard. (Even in principle it's not straightforward for government to capture the consumer surplus of infrastructure investment. And in practice tax increases are politically problematic). So it's rationed, instead.
- Krasnol 4y agoWhy should states invest it's taxpayer money into overpriced and slow technology when there are cheaper and fast improving alternatives?
- sofixa 4y agoBecause you can start a project with the existing, proven and expensive tech today. Grid-scale storage is purely theoretical today (bar pumped-up hydro, which is infeasible in most locations). There's lots of hope, and money should be invested in the various alternatives, absolutely. But nobody can say when and if that tech would be ready.
- renewiltord 4y agoAccording to this commenter, we can't build with the proven and expensive tech today because we don't have it any more https://news.ycombinator.com/item?id=31682876 https://news.ycombinator.com/item?id=31682876
- sofixa 4y agoDepends who. For EPR, we're almost over the hump, with the latest projects in Finland and France coming online and becoming fully operational in the near future. Rosatom has continued pumping out reactors at a decent rate.
- renewiltord 4y agoLooks like they should do it and we shouldn't in America unless we can somehow allow them to build ours (I think a fear of competition will make this infeasible but if we're lucky we'll get the stuff).
- deleted 4y ago[deleted]
- orthecreedence 4y agoStorage is not not purely theoretical!! In fact there are <lists five completely theoretical storage methods that rely on stable climate or perfect geography>.
- Tenoke 4y agoIf you think 50% cost overruns and overheads are uncommon for state sponsored projects.. you will be right but only because often the actual numbers are much higher.
- stewbrew 4y agoThe state better invests the money in cheaper technologies. Why should it waste the money on nuclear plants? Edit: To the downvoters: Seriously, why should the state waste money on a technology that doesn't work and never has? More than half of France's nuclear power plants are currently offline and in maintainence mode. Maybe also because they could not produce electricity at market prices.
- strainer 4y agoA project should garner favorable financing arrangements for its merits, not for its risks.
- danans 4y agoMerit must be determined in a way that includes known risks. Anything otherwise would be fraudulent.
- mellavora 4y agoHuh. I'd argue that they should be state-sponsored because that is what the state is for-- investing in long-term infrastructure where the value is widely diffused and thus hard to capture via market mechanisms, i.e. investments which are foundational to the more focused investments which business is so well suited to maximize. similar to things like interstate highways or internets or public schooling. I'd add "healthcare" to the list, but some countries haven't realized this yet.
- joe_the_user 4y agoIndeed, US large-construction has reached a point of fundamental/terminal corruption through the process of private contracting and especially through the bid-based system. You can see this with the disastrous failure of public transit construction and planning in the country and if nuclear became an option, it seems very likely that the same corrupt mouths that eat up transit spend would also eat nuclear spending. Something for nuclear proponents to consider.
- belorn 4y agoOne of the largest problem is the concept of cost-plus contracts, where the construction doesn't have a fixed cost from the beginning. Government could in theory avoid this problem by doing the design first and then have companies bid on the construction without a cost-plus contract. This assumes that the regulations remain constant from start to finish, as well as the contractual obligations.
- this_user 4y ago> This is why nuclear power plants should be state-sponsored projects. States typically have loans at 0% rate, or even negative interests. Not anymore with inflation at around 8% in many western countries. And even so, construction and operation still remain expensive. France's EDL is basically bankrupt if it were not for the state backstopping them. However you want to slice it, nuclear power is not economically viable, and looks even worse compared to the rapidly decreasing costs of renewable sources of energy. So why waste more money on an obsolete technology rather than use it for solving the remaining issues with renewables like energy storage? Invest that money in battery technology and everything that comes with that. That approach will do a lot more good in the long run than trying to keep the nuclear industry on life support even though it has failed for half a century to deliver on its promises.
- outworlder 4y ago> So why waste more money on an obsolete technology It is not obsolete. At all. You can argue that some reactor designs should not be used and I would agree. But fission is the only answer we currently have for baseline power that doesn't involve burning things. It will become obsolete if we can ever make fusion work. We should be deploying more reactors. There are small reactors (shipping container-sized) that could be used to power small towns and are pretty safe. Good luck getting one approved and installed in your neighborhood. It's not the tech that's being held back, it's people. Look, I love batteries, I drive EVs since 2015. But if we want to avoid the worst effects of climate change, we need to provide cheap and reliable baseline power 24/7. There's not enough time to do so with batteries alone.
- bozhark 4y agoHad to delete my one line response because you embodied everything I meant. Cheers
- samstave 4y agoI have long thought there should be a global nuclear consortium and have that organization build and run and manage and secure all the nuclear power plants in the world. Earth/Humanity needs electricity FOREVER. Its bizarre that we cant come together over this expressly universal need. This and water.
- fulafel 4y agoStates tend to have self imposed debt limiting policies, so opportunity costs are still there for investments.
- ncmncm 4y agoMaybe if they had to be state-sponsored, we could manage to do entirely without them, instead. But it didn:t save France from needing to spend tens of $billions decommissioning old junk reactors.